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Finally, Mr. Katz opined that salaries and bonuses paid to
Dennis and Curtis were excessive because the compensation
exceeded the 1995 and 1996 median cash compensation for CEO's and
COO's included in the ERI data. However, Mr. Katz, like Dr.
Lacey, failed to take into account the stock options granted to
the CEO's and COO's of the publicly traded companies. See
Labelgraphics, Inc. v. Commissioner, supra.
Accordingly, we reject Mr. Katz' opinion concerning
reasonable compensation paid to Dennis and Curtis for the years
at issue.
D. Rejection of Expert Witness Opinions
Because of fundamental differences in approach among the
experts engaged by both parties, the values arrived at in the
reports are extremely far apart. Although it is not unusual in
valuation cases that two experts reach significantly different
conclusions, the reports and testimony of the experts in this
case are so dissimilar that the reliability of the experts is
brought into question. In this case, the experts reached
conclusions that patently favored their respective clients, and
their reports were designed to support their conclusions.
The purpose of expert testimony is to assist the trier of
fact to understand evidence that will determine the fact in
issue. See Laureys v. Commissioner, 92 T.C. 101, 127-129 (1989).
That purpose is jeopardized when an expert assumes the position
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